Federal Overtime Law Update &California Increase of Minimum Wage & Sick Days

March 28, 2016

Federal Overtime Law Update

As you may recall, last year, the Department of Labor (“DOL”) published proposed regulations overhauling the federal white collar overtime exemptions.  In its proposed regulations, the DOL proposed increasing the minimum salary to qualify for exempt status (under the white collar exemptions for administrative, executive, and professional employees) from $23,660 per year to approximately $50,440 per year, and increasing the minimum salary to qualify for the highly compensated employee exemption from $100,000 per year to approximately $122,148 per year.  These proposed amounts are not certain because they are based on the 40th and 90th percentiles, respectively, for wages earned by salaried full-time workers according to U.S. census data.  These were the figures the DOL projected for 2016.  The DOL also proposed automatic annual increases to the minimum salary threshold.

The DOL said that it was considering whether non-discretionary bonuses could be counted in determining whether an employee’s compensation meets the minimum salary threshold.  The DOL also said that it was considering whether changes should made to the “duties” test for exempt status and, more specifically, whether California’s “quantitative” test (which requires an employee to spend more than 50% of his/her time on exempt duties in order to qualify as exempt) should be adopted to replace the “primary duty” test currently in place under federal law.  The DOL did not propose any specific changes to the duties tests, but simply said that it is considering changes and invited comment on this topic.

The DOL received scores of comments on the proposed regulations, but it is unclear how, if at all, the comments will impact the content of the regulations as proposed.  Late last year, the DOL indicated that it intended for a final rule implementing the regulations to be published in July 2016.  Just last week, the DOL sent the final rule to the Office of Management and Budget (“OMB”) to review.  This is the final step in the required process before publication.  OMB review typically takes 2 months, so it is likely that the final overtime regulations will be published by July (and possibly as early as May or June).  The content of the final rule will not be made public until OMB review is complete and the rule is published.

Within days of the DOL sending its final rule to the OMB, GOP lawmakers introduced legislation to block implementation of the DOL’s final rule, suggesting it is void due to lack of sufficient analysis of its impact on the business community, and that proposed automatic increases to the annual salary and changes to the duties test cannot be made without the DOL first going through the formal notice and comment rulemaking process.  Of course, as long as President Obama remains in office (with veto power), the chance of this legislation succeeding is close to zero.

Given the likely implementation of new federal overtime rules in the next few months, employers should begin reviewing their exempt classifications with the expectation that the new minimum salary thresholds will be in the neighborhood of those reflected in the proposed regulations and that there may be changes in the duties test that could impact the exempt classification of employees who spend significant time performing non-exempt tasks in addition to their exempt duties.

Well, there is the update. As I have told my readers get ready because it is going to happen.

Second Article

California Increase of Minimum Wage & Sick Days is on the November Ballot

An initiative backed by labor union SEIU-United Healthcare Workers West to raise California’s minimum wage is slated to be on the November ballot, after backers gathered more than 400,000 signatures supporting the measure.  The measure, dubbed The Fair Wage Act of 2016, proposes increasing California’s minimum wage to $11 per hour in 2017, with further one dollar per hour increases each year thereafter until reaching $15 per hour in 2021.  A competing measure backed by another branch of the same labor group, SEIU-State Council, may also make it on the November ballot as the largest labor union in the state continues to gather signatures for that initiative.  This rival measure seeks to increase the minimum wage to $15 per hour by 2020 (a year earlier than the SEIU-UHW backed measure) and also seeks to mandate that California employers provide employees with 6 days of paid sick leave per year (double the amount currently required).  I will keep you posted of any significant developments related to these measures.

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Personal Liability for FMLA Violations? HR & Managers!

March 21, 2016

As many of you know, managers and supervisors have a tendency to dread going to management training seminars (unless they are attending mine of course!). Many, generally, feel it is a waste of time although the light is slowly starting to come on. With some states and the feds starting to hold managers and supervisors personally liable for wage and hour violations they paying more attention. Now, here is another reason—personal liability for violations of the FMLA! I’m telling you, I cannot make this “stuff” up!

In a recent case a Federal Court of Appeals (Graziadio v. Culinary Institute of Am), held that a manager or supervisor can be individually liable for FMLA violations. According to the Graziadio court, one must balance the following four factors to determine if a manager or supervisor is individually liable under the FMLA:

  1. Whether the manager or supervisor had the power to hire and fire the employees;
  2. Whether the manager or supervisor supervised and controlled employee work schedules or conditions of employment;
  3. Whether the manager or supervisor determined the rate and method of payment; and
  4. Whether the manager or supervisor maintained employment records.

The court concluded that a jury question existed over whether the manager and/or HR Director, met this test for the imposition of individual liability:

“On the overarching question of whether Garrioch [HR Manager] “controlled plaintiff’s rights under the FMLA,” there seems to be ample evidence to support the conclusion that she did: deposition testimony and email exchanges demonstrate a) that Garrioch reviewed Graziadio’s FMLA paperwork, b) that she determined its adequacy, c) that she controlled Graziadio’s ability to return to work and under what conditions, and d) that she sent Graziadio nearly every communication regarding her leave and employment (including the letter ultimately communicating her termination).”

Does the above conclusion fit squarely into your personal practices regarding an FMLA leave of absence? Sounds like most of your organizations’ HR managers or directors could face a similar set of circumstances. This is another reason why I preach DO NOT TERMINATE EMPLOYEES WHO ARE ON A LEAVE OF ABSENCE! Sorry about the caps but this time I am yelling!

Now, this particular case is limited to the 2nd Circuit (which covers Connecticut, New York, and Vermont), but does point out that other courts that have examined this issue have similarly found the FMLA to impose individual liability. California, as another example has stricter guidelines on the state level. This is truly becoming a hotbed of litigation.

What does all this mean for your business? The FMLA is a hyper-technical and hyper-complicated statute. Indeed, leaves of absence under the FMLA and its’ administration is one of HR’s biggest headaches. If you are not effectively and efficiently training your managers and supervisors on the FMLA, you are doing your employees a disservice, as they may not receive the leave to which they are entitled, and you are doing your managers and supervisors a disservice, as you are unnecessarily exposing them to liability. Wake up people!

Note: The Podcast this week is on “Fragrance Sensitivities.” Go to www.pottsandassociates.com or go to iTunes and click on “Listen Up with Jim Potts”



New Harassment/Discrimination Law

March 14, 2016

Well, here we go again but let me make it clear that although this is a new California law, my out of state clients and readers need to consider implementing the new requirements below to get ahead of the curve. I can almost guarantee that the EEOC will pick up on this.

Now, having stated the above, California’s Fair Employment and Housing Council (“FEHC”) has adopted new regulations under the Fair Employment and Housing Act (“FEHA”) that take effect April 1.  For the most part, the new regulations reflect recent changes in the law (e.g. making clear that FEHA protects interns and volunteers and persons providing services pursuant to a contract).  However, the new regulations contain an important new substantive requirement that employers adopt a written discrimination, harassment, and retaliation prevention policy that meets specified requirements.  According to the FEHC, this new policy requirement is in furtherance of employers’ obligation to prevent (and not just correct) discrimination, harassment, and retaliation in the workplace, and is in addition to employers’ existing obligation to provide its workforce with a copy of the DFEH brochure on sexual harassment (DFEH-185) and/or an alternative anti-harassment policy that complies with Government Code section 12950. Under the new regulations, employers must have a broader discrimination, harassment, and retaliation prevention policy that:

  1.    Is in writing
  2.    Sets forth all of the protected categories currently described in FEHA (race, religious creed, color, national origin, ancestry, physical and/or mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, sexual orientation, and military and veteran status);
  3. Indicates that the law prohibits coworkers and third parties, as well as managers and supervisors, with whom the employee comes into contact from engaging in conduct prohibited by FEHA;
  4. Provides a complaint mechanism that does not require an employee to complain directly to his/her immediate supervisor, such as options for direct communication either orally or in writing with a designated company representative, such as a human resource manager or other supervisor, a complaint hotline, access to an ombudsperson, and/or identification of the DFEH and EEOC as additional avenues to lodge complaints
  5. Instructs supervisors to report any complaints of misconduct to a designated company representative
  6. Indicates that when the company receives allegations of misconduct, it will conduct a fair, timely, and thorough investigation that provides all parties appropriate due process and reaches reasonable conclusions based on the evidence collected (it is not clear what the phrase “due process” means in the context of these regulations and the FEHC declined to remove this phrase or to clarify it in response to comments from the public).
  7. States that confidentiality will be kept by the employer to the extent possible
  8. Indicates that if at the end of the investigation misconduct is found, appropriate remedial measures will be taken
  9. Makes clear that employees will not be exposed to retaliation as a result of lodging a complaint or participating in a workplace investigation; and
  10. Creates a complaint process to ensure that complaints receive (a) a designation of confidentiality, to the extent possible; (b) a timely response; (c) impartial and timely investigation by qualified personnel; (d) documentation and tracking for reasonable progress; (e) appropriate options for remedial actions and resolution; and (f) timely closure.  It is not clear from the regulations whether the details of this process need to be spelled out in the policy and the FEHC did not clarify this in response to comments and requests from the public.

Dissemination of the policy may be through one or more of the following methods:

  1.  Providing a hard copy of the policy to all employees with an acknowledgement of receipt form.
  2. Sending the policy via e-mail with an acknowledgement return form.
  3. Posting current versions of the policy on a company intranet with a tracking system ensuring all employees have read and acknowledged receipt of the policies.
  4. Discussing policies upon hire and/or during a new orientation session; and/or
  5. Any other way that ensures employees receive and understand the policies.

This new requirement also states that any employer whose workforce at any facility or establishment contains 10 percent or more of persons who speak a language other than English as their spoken language must translate the policy into every language that is spoken by at least 10 percent of the workforce.

The new regulations make clear that they do not create a new private right of action for failure to prevent discrimination, harassment, or retaliation, and that a private plaintiff cannot prevail on a failure to prevent claim unless they first prevail on an underlying claim of discrimination, harassment, or retaliation.  However, the regulations do newly provide that the Department may seek non-monetary preventative remedies against an employer for failing to adequately prevent discrimination, harassment, or retaliation regardless of whether or not the Department proves an underlying claim of discrimination, harassment, or retaliation.

All employers should review and revise existing discrimination, harassment, and retaliation policies to ensure that they meet the requirements of the new regulations and/or should adopt a new discrimination, harassment, and retaliation prevention policy that meets the requirements of the new regulations as outlined above.



A Step-by-Step Guide to Terminations

March 7, 2016

Let’s be honest, terminations are never easy. They can be emotional from both sides whether it is for the good of the company or the employee. Whatever your decision, put company interests first. For months you’ve probably put up with less-than-stellar performance in hopes that the situation would somehow correct itself. Now that the end is at hand, plan the transition so as to do the least damage to company and coworkers.

Make sure you run the termination by your counsel or advisors for such matters. To make sure that you’re on solid ground in terminating an employee, imagine yourself defending your action in front of a jury. Assume that you are on the witness stand and the former employee’s lawyer is attempting to prove that the firing was unjust, unfair, and vindictive.

Choose the day and the time for the termi­nation deliberately. While experts disagree on when a firing should occur, all acknowledge the importance of having a rationale — a good business reason for your choice of time and day for dropping the ax. Doing it early in the day, early in the week, encourages the employee to get right to work on finding another job and reduces the chances that he’ll spend the weekend moping in a black hole or — worse — plotting revenge. Friday after­noons, on the other hand, often create the minimum amount of disruption to the rest of the staff. Personally, this is my preference.

Take it step by step. Bungled terminations usually result from acting without thinking. Before you utter a word, write down the most important things you plan to say and then stick to your script. Recognize what you’re up to. This is not a counseling session. It’s the announce­ment that an irrevocable decision has been made to discharge the individual.  Therefore:

1. Get right to the point. Skip the small talk. Start the termination meeting by telling the person at the outset that the decision has been made to sever the employment relationship.

2. Break the bad news. State the reason for the termination in one or two short sentences and tell them “Your employment has been terminated effective immediately,” not, “will be terminated.”

Tell them why. They have a right to know but don’t let it be long and drawn out. Also, keep in mind, when you’re telling someone they’re fired:

  •  Don’t say, “I understand how you feel.” You don’t.
  • Don’t say, “I know that this hurts right now but later on you’ll realize that this is the best thing that could have happened.” It isn’t. It is a very bad thing.
  • Avoid justifications (“You should have known”).
  • Survival is a strong instinct — give it time to work.

3. Listen to what the employee has to say. There are several predictable reactions to the news that one has just lost his job. The most common are shock, denial, anger and grief. Listening to what the employee says will tell you which of the reactions he is experi­encing. Your response will be more effective if you know how he is taking the news.

4. Cover everything essential. Be specific about what will happen next: pay, benefits, unused vacation time, references, outplacement, explanations to coworkers, ongoing projects, etc.

5. Wrap it up graciously. It’s usually best to schedule the termination meeting at the end of a work day so that the meeting takes place while coworkers are leav­ing. Close by thanking the individual for his contributions to the company. Walk with the now ex-employee back to his desk and wait while he collects any personal items. Go to the exit together, shake hands, wish him well, and part with both of your dignities intact.

Avoid misdirected compassion. Most managers I know are empathetic and considerate people. But when the need arises to terminate an employee their compassion is often misdirected. They become so concerned about the adverse impact on the employee to be discharged that they forget about all the people who manage to do their jobs and meet our expectations in spite of having as many personal problems and difficulties as the person being terminated.

Actually, when slackers and slouches are finally fired, managers usually discover that coworkers are relieved. Their peers are the ones who have had to work harder to make up for their shortcomings and slacking off. When terminations are well justified and professionally executed, the rest of the work group realizes that this is a good place to work.

Keep in mind when a person is being terminated they may experience “shock and denial.” Acknowledge their emotions, don’t debate or defend the reason, repeat and reinstate the message, make sure the message got through, keep it moving, and have them focus on the future.

Finally, the most common problem with terminations is that they don’t happen as fast as they should. Once the decision has been made to pull the plug and start over, don’t keep putting it off in the misguided hope that — somehow — things may still work out. They never do. Remember: It’s not the people you fire who make your life miserable. It’s the ones you don’t.

Note: The Podcast this week discusses “Job References: A common Sense Approach.” Go to http://www.pottsandassociates.com